It's not every day that AT&T does something unambiguously good for its customers, so let's not skimp on the praise. This week, the mobile carrier announced that it would finally allow iPhone users to run Internet phone services like Skype over their cellular connections. Skype and other voice-over-IP apps have been allowed on the iPhone for a while, but AT&T only let them work when your phone was connected to a Wi-Fi network. This was a hassle—it effectively meant that you could only use Skype at home or at the office, not as a mobile app. That's why AT&T deserves a pat on the back for its policy change: Skype lets you call people anywhere in the world for free, and now iPhone users can do so from wherever they please (or, at least, anywhere they can get decent coverage, which means not my house). And because Skype sends its data over the Internet, you won't even run up airtime minutes while you're gabbing. Good job, AT&T!
But, wait, there's more. AT&T's announcement was not the only pro-consumer news from a cell carrier this week: Verizon said that it's teaming up with Google to offer customers the search company's Android phones. This is also huge news; in the past, Google and Verizon have been at odds over the question of "openness" on wireless networks. Google has long pushed for rules that would force Verizon and other cell companies to let customers run any hardware or software on wireless broadband lines. Verizon has long been in favor of certain restrictions on what customers can do. But now the carrier seems to be changing its tune. Verizon has vowed to let Google Voice—the free long-distance and voicemail service that Apple rejected from the iPhone—run on the new Android phones. Indeed, on a conference call announcing the deal, Verizon CEO Lowell McAdam suggested that customers would be allowed to run pretty much anything on their Android phones: "Either you have an open device or not," he said. "This will be open."
Close observers of the wireless industry might be wondering whether this was opposite week. Since when do mobile carriers go out of their way to offer their customers more functions and substantially cheaper service? That's easy: Since the end of June, when Julius Genachowski became chairman of the Federal Communications Commission.
Genachowski, a lawyer who worked for many years in Silicon Valley, is the most technologically aware FCC chairman ever to occupy the job. In particular, he understands what has made the Internet such a successful platform for innovation: It was designed to avoid favoring any particular application. In the few months since he took over the FCC, Genachowski has set a new tone for the agency, promising to rein in any companies that try to restrict what people can do on their Internet lines. In August, he surprised the tech industry by demanding an explanation from Apple for its rejection of Google Voice. Late in September, he argued for new rules to make sure Internet service providers obey the FCC's network-neutrality principles. In an interview with CNBC the other day, Genachowski was asked whether telecom companies should think of him as the new sheriff in town. The chairman dodged the question. But he's being modest: Genachowski didn't have to pass a single new regulation before carriers began to transform their business practices. Whether or not he wants to be known as the sheriff, they're already scrambling to avoid his six-shooter.
Why is it such a big deal for Skype to finally get a place on the iPhone? It only has to do with the future of the Internet. As Genachowski explained in a speech at the Brookings Institution recently, the Internet was purposefully designed to be a kind of "dumb pipe"; in other words, the network doesn't use any "intelligence" to decide whether a certain application is worthy of using network space. "Instead, the Internet's open architecture pushes decision-making and intelligence to the edge of the network—to end users, to the cloud, to businesses of every size and in every sector of the economy, to creators and speakers across the country and around the globe," Genachowski said.
And that's the main reason why the Internet has bred innovation. The early Internet didn't favor a certain protocol for delivering graphical information; that's why Tim Berners-Lee was free to come along and invent the Web, and Marc Andreessen was able to create a graphical Web browser. The early Internet didn't favor any specific sort of messaging platform—and so it was easy for ICQ, AIM, and then Skype to come along and win wide support. "The Internet's creators didn't want the network architecture—or any single entity—to pick winners and losers," Genachowski explains. "Because it might pick the wrong ones."
The trouble is, both wireless and wired ISPs seem increasingly open to the idea of favoring certain technologies. In 2007, Comcast was caught blocking BitTorrent on people's cable-modems—even if they were downloading completely legal material. Wireless companies have been much more brazen. They've long blocked VoIP apps like Skype and have blocked certain handsets that could eat into their bottom line (for instance, Verizon put restrictions on a phone that would allow people to switch among wireless networks as they traveled the globe). What's more, as Genachowski noted, an increasing number of services on the Internet compete with content provided by the cable and phone companies—these days, you can get TV shows and phone service from the Web, so why do you need to pay Comcast anything? As a result, Genachowski says, broadband companies have an economic incentive to block content that might cost them money.
I don't mean to discount wireless carriers' concerns. Both AT&T and Verizon are spending tens of billions of dollars to roll out advanced networks, and they've got an interest in recouping their costs. It's also true that the carriers need to manage traffic on their networks. As more people get more smartphones, the nation's wireless networks will quickly get clogged—as iPhone customers are well aware. But there are fair ways to manage traffic, and there are unfair ways; there are methods that will kill innovation, and there are those that won't. As I argued the other day, if AT&T wants a network that runs more smoothly, it should consider charging people a fee for using more bandwidth; that's a lot more egalitarian than blocking entire applications.
It's here that Genachowski might prove a powerful force—in subtly pushing carriers to adopt more consumer-friendly policies. The FCC chairman might not even need to make any new regulations to do it. If he takes a tough enough line against unfair policies, the carriers just might reform themselves.